International Commerce: Positive Trends
In H1 2011, Belarus’ commodity export amounted to $7 billion
In H1 2011, Belarus’ commodity export amounted to $7 billion
Statistics Are Good
The processes underway cannot but have a negative influence on the open economies of the world, and Belarus is not an exception. Volatility of international financial markets, aggravation of the domestic political situation in a number of countries that are our trade partners, protectionist measures taken
the raising of the state debt ceiling, unprecedented downgrade of the U.S. credit rating, escalating debt crisis in the EU, absence of balance in international trade and a number of other factors clearly show that the world economy is still struggling, even though international institutions have worked quite hard to bring the situation back to normal. Experts’ forecasts about the rapid stabilization of the macroeconomic situation have proved excessively optimistic. today the outlook is more restrained. Experts do not rule out even the second wave of the financial and economic crisis.
by some of them – this is by far not the complete list of the obstacles that we have to deal with in addishon to internal economic problems.
Nevertheless, even in such a difficult situation, which is aggravated by the unstable demand for commodities and compression of regional markets, rise in loan costs, attempts of putting us under economic pressure, we continue to hold on adapting flexibly and rapidly to the changes in outside trends.
It is clear that with the openness of the Belarusian economy, the achievement of the main goal of this five-year period, which is to improve the wellbeing of our citizens and their standards of living, depends on our ability to fine-tune economic relations with our foreign partners.
The strategic avenues of our nation’s foreign economic policy are laid down in the Social and Economic Development Program of the Republic of Belarus for the Years 2011-2015 and the National Export Development Program for the same period. The main goal is to have a balanced economy by making sure that exports expand faster than imports. We are facing an ambitious objective, which is to achieve a 2.2 time increase in the export of goods and a 3 time rise in the export of services in 2011-2015, and reach a trade surplus as soon as by the end of 2014.
The Government, National Bank, ministries, and local authorities are doing some specific work to achieve the export target and rectify our
nation’s trade balance. According to statistics, the measures taken in Belarus to build up exports and improve things in the monetary, fiscal policy in H1 2011 have paved the way for some positive trends on our way towards a foreign trade surplus.
First of all, we have managed to reverse the export/import disparity, when import was rising much faster than export, and as a result put a cap on the growth of the deficit in the trade in goods. In January 2011, imports exceeded exports by 41.5%. But in January-june, exports rose 8.7% ahead of imports (see the Diagram).
The foreign trade deficit in January-june 2011 was $3 billion, or 52.6% of the 2011 target. And in this we see an opportunity of reaching the planned figure (minus $5.7 billion) by the year-end with a prospect of reaching a trade surplus by 2014.
A certain upturn in the world economy in recent months and the weakening of the Belarusian ruble against foreign currencies have also played into the hands of Belarusian exporters. The increase in commod- ity export in the first half of 2011 was $7 billion.
It is also important that the exports increased across all the major commodity groups. The growth came on the heels of the increase in the average export prices (by 25.5%) and their physical volume (by 29.3%) unlike in the previous year when the aggregate rise in exports was due to the difference in prices.
Goals for Today and Tomorrow
The main reason for the foreign trade deficit now is the inefficiency of some Belarusian companies who cannot compensate for the increase in the cost of intermediate imports by increasing the physical volume of the export of low added-value goods.
Therefore, there is a strategic need to change the structure of export toward increasing the share of innovative, science-intensive high added-value goods, and cut on the consumption of energy resources and raw materials in order to reduce imports. For this, there is a need to speed up modernization of the Belarusian economy and simultaneously shift the center of gravity toward science-intensive innovative projects with a minimum dependence on the import of energy, raw materials and component parts.
The modernization of the economy requires foreign investments. This year we need to have $6.5 billion in foreign direct investments. To attract these funds, it is not enough to invite strategic investors to participate in the privatization program. We also need to collaborate with the world’s leading transnational corporations and investment companies. At the moment, our foreign diplomatic institutions are working hard to find well-connected investment agents interested in representing Belarus in the international arena taking into account mutual interests.
To achieve balance in our export/ import operations and the payment balance, we also need to match our domestic spending, budget expenses, lending schemes and salary payments with the growth of industrial production, GDP, and labor productivity.
We also continue seeking ways to sell more Belarusian products in our traditional markets by creating commodity distribution networks, service and logistic centers, assembly plants, etc. Our companies need to work harder on this; they should open more centers outside Belarus to be able to process millions of tonnes of cargo that Belarus exports.
Equally important is to explore new promising markets and establish stronger commercial ties with the dynamic economies across the world. Export diversification is both a means to strengthen our economic security and a logical way to boost the economy.
The Foreign Ministry together with other stakeholders continues to work hard on expanding the geography of sales of Belarusian products. In H1 2011, Belarusian-made goods were delivered to 20 new destinations (Uruguay, Barbados, Bahrain, Benin, Bolivia, Cambodia, Panama, Peru, Surinam, El Salvador, and other destinations). Our exporters have strengthened their positions considerably in Afghanistan, Vietnam, Honduras, Greece, Morocco, Ethiopia, Nigeria, Chile, Bangladesh, Australia, Malaysia, and Mongolia. The rise in export to these countries in January-june was over $300 million. Belarusian companies have joined forces with diplomatic missions to find new markets for our buses and trolleybuses (to Venezuela); tractors and semi-trailer trucks (to Hungary); heavy-duty trucks (to Bulgaria and South Africa); potash fertilizers (to Argentina, Ivory Coast, Belgium).
We continue setting up new assembly plants abroad. The priority is given to establishing joint ventures with our foreign partners. All in all, we now have 103 overseas assembly plants, with 16 of them launched in January-june 2011. Sixty of them are located in Russia, 13 in Kazakhstan, 7 in Ukraine, 4 in China, 3 in African countries, 2 in Azerbaijan, 2 in Lithuania, 2 in Latvia, 2 in Serbia, 1 in Moldova, Kyrgyzstan, Uzbekistan, Poland, Slovakia, Vietnam, Romania, and
Iran. The trends are positive, but our producers need to work harder on providing high-quality aftersales/maintenance services.
Another strategic objective is to maximize the share of services that bring profit, including by taking advantage of Belarus’ transit opportunities. The export of services could somehow compensate for the expenses associated with the import of goods, and in the future it could become the main source of foreign currency revenues in Belarus.
We also have huge opportunities for advancing the economy through the collaboration between the government and private business. The government thus participates in private business initiatives and invites businesses to partici- pate in socially sensitive projects under the umbrella of the state. The main areas where we could use this form of collaboration are industrial production and transport infrastructure, scientific research with commercial prospects, innovation, and telecommunication. This kind of collaboration could ease the burden on the state budget and help diversify production. There are plans to adopt a public-private partnership program in Belarus setting out clear-cut goals and mechanisms for every sector of public infrastructure and a fitting regulatory legal framework. And the last thing. One of the Foreign Ministry’s main areas of work is to provide more support to Belarusian exporters. Belarus has recently adopted some of the internationally accepted practices of government-sponsored crediting and insuring export and export risks, and international leasing. We are looking for ways to create a specialist export bank in Belarus, ease the procedure of granting preferential export loans, introduce international methods of grant-based support for exporters which implies compensating for businesses’ expenses related to the export (certification of products, information and marketing services, participation in dedicated exhibitions abroad, etc.).
*** There is still a lot to be done to strengthen Belarus’ economic security. Despite the existing problems and new challenges, the current foreign trade figures prove the effectiveness of our foreign economic policy.
The joint Belarusian-german
joint venture Bemkromgaz, which produces gas meters, plans to
increase exports to Russia by more than 60%
Radoshkovichi Ceramic Factory, one of the country’s largest producers of ceramic bricks, reported a 16.9% increase in export earnings in JanuaryJuly this year
The Gomel company Botticelli, a manufacturer of children’s shoes, exports more than 60% of its output
Belarus needs to take additional measures to make its logistics business more attractive, Prime Minister Mikhail Myasnikovich said during his visit to the Twenty Four logistics company in July 2011